There’s more to mining Bitcoin in Canada than plugging in a computer and pushing a “mine” button. While it’s perfectly legal to mine Bitcoin in Canada, doing so takes a little more planning and understanding.
Don’t worry; we’ll tell you everything you need to know about how to mine Bitcoin in Canada.
Mining Bitcoin requires a lot of electricity and computing power. Although, at the same time, it’s potentially a great way to earn Bitcoin while mining in Canada, there’s also the possibility that you spend a lot of time and money mining Bitcoin and never see a return on your investment.
What is Bitcoin Mining?
Those unfamiliar with mining Bitcoin think it’s a way to create new Bitcoin. However, validating blocks on the blockchain involves much more. For example, mining Bitcoin prevents the double-spending problem often associated with distributed networks.
Double spending is a flaw in digital currencies where the same token can be spent more than once by the same person.
When someone spends fiat currency, that physical piece of paper or coin is gone and belongs to someone else. With digital currency, the distributed ledger has to be updated.
This involves crediting one account while debiting another. The challenge with cryptocurrencies like Bitcoin is that the digital ledger can be easily manipulated.
That’s why Bitcoin’s blockchain only permits validated miners to confirm transactions on its network.
As a result, in addition to mining Bitcoin, miners are also protecting the network from potential double spending by malicious actors. When a new Bitcoin is generated, miners are rewarded for their efforts in keeping the network secure.
Distributed ledgers like Bitcoin don’t have a centralized authority, which is why it’s so important that the network has legitimate miners validating and confirming transactions.
Because of the role they play in securing the network and validating transactions, miners are rewarded with new Bitcoin.
Of course, there are millions of Bitcoin miners, and not every miner is going to receive a reward every time a block is mined. There are ways to increase the chance of getting a piece of the reward, but we’ll talk about that later.
To ensure that only legitimate Bitcoin miners are validating transactions, the network uses a Proof-of-Work (PoW) consensus mechanism. Using PoW, miners earn Bitcoin rewards while protecting the blockchain against outside hacks.
How to Start Mining Bitcoin in Canada
Getting started mining Bitcoin in Canada means you need a computer and special software designed to solve cryptographic algorithms.
When Bitcoin first launched, it was fairly easy to solve the algorithm using a computer with a CPU. However, as the equations for solving blocks becomes more difficult, more powerful computers are needed.
For those mining Bitcoin from their home, they’re using the GPU in their computer. Others turned to ASIC (application-specific integrated circuit) miners, which are designed specifically with mining in mind.
Don’t forget that in order to mine Bitcoin, you need a constant internet connection.
Methods Used to Mine Bitcoin
There are several ways to mine Bitcoin in Canada. We’ve talked about several of them from a high level. Now, let’s dive a little deeper into each method used to mine Bitcoin.
During the early stages of Bitcoin mining, it appeared as though everyone and their mom were using a CPU to mine. However, with the development of faster and better methods, you won’t find many serious Bitcoin miners using their CPUs.
The reason behind this is due to the slowness of using a CPU to mine. It could take weeks or months to receive even a tiny amount of Bitcoin using this type of mining process.
Unfortunately, any Bitcoin you happen to mine using a CPU will probably be offset by the amount you pay for electricity.
There’s always the chance you could find cheap electricity, but still, you’re not likely to earn Bitcoin using a CPU since it’s such a slow mining method.
The advantage, of course, is that anyone with a computer can mine Bitcoin using a CPU. So long as you have a computer, electricity, and internet access, you can get started.
Another way you can mine Bitcoin is through a computer’s GPU. Currently, this is the most beneficial way to mine Bitcoin. Doing a quick search on Bitcoin mining rigs will return plenty of options that utilize a GPU.
Most cloud miners use a GPU, so you know these are good options when it comes to mining Bitcoin. While it’s not as cheap as using a CPU to mine, a GPU is probably the next cheapest option and is effective and efficient.
Your upfront cost will be high, but once you’re mining, you’ll reach the point of breaking even must quicker than you would with a CPU.
If you can find decently priced electricity and internet, you might begin to see profits in just a few months. Keep in mind that your costs will be impacted by the price of Bitcoin, the cost of your internet and electricity, and how much you spend on your GPU.
While the barrier to entry for GPU mining is higher than it is for CPU mining, it’s still a good way to get started with Bitcoin mining in Canada. You’ll probably pay a few thousand dollars upfront, but you could earn that and more within six months of mining using your GPU.
3) Cloud Mining
If you don’t want to mess with a CPU or GPU, you can go the cloud route to mine Bitcoin. If you don’t have room to set up a mining rig or just don’t want to mess with it, you might consider cloud mining.
Cloud mining is paying a third-party (typically a huge company) for the use of their mining equipment. Typically, cloud mining sites will refer to these computers are “rigs.” Through these computers, you can mine Bitcoin to your heart’s content just by clicking a button.
With cloud mining, you choose how long you want to mine, along with what time of day. If you earn any Bitcoin while mining, the rewards are sent straight to your personal Bitcoin wallet.
However, chances are good that you’ll need to pay for any electricity you use, which is usually shown on the website before you get started.
4) Free cloud mining
If you’re not sure if you want to pay for cloud mining, you can always get started with free mining. This is a good way to learn more about cloud mining and how it works before spending a lot of money.
Of course, you’re not going to earn much in the way of rewards because this type of cloud mining is notoriously slow, but you’ll gain the necessary experience to make an educated decision about paying for cloud mining.
5) Paid cloud mining
When you’ve familiarised yourself with free cloud mining, you can always switch over to paid mining. The first thing you’ll need to do for paid cloud mining is to find a host. There are several good options on the market.
Go over the plans the host company offers and find one that makes sense for your budget. If you look hard enough, you can find a cloud mining host that will let you customize your cloud mining plan.
Once you’ve chosen the plan you want, you have to pay before you can start mining. Provide the host with your wallet address, then get to it. Cloud mining is a solid option for those who are interested in mining over the long haul, as most break even sometime around the year and a half mark.
ASIC, or Application-Specific Integrated Circuit mining, is the most expensive way to mine Bitcoin. An ASIC is hardware designed specifically to mine Bitcoin and other cryptocurrencies. That’s all they’re intended to do.
These devices are huge steps up from CPU and GPU mining and are very well-known in the world of crypto.
The biggest drawback to an ASIC miner is the amount of electricity it consumes and its ability to corner the market on Bitcoin mining. Of course, this goes against everything Bitcoin and cryptocurrencies represent.
For anyone who decides they want to use an ASIC to mine Bitcoin, they won’t be cheap. Buying just a single ASIC could cost you as much as ten thousand dollars. Of course, that cost is offset if you manage to mine even a single Bitcoin.
Is it Legal to Mine Bitcoin in Canada?
It is perfectly legal to mine Bitcoin in Canada. It’s also legal to mine other cryptocurrencies if you choose to do so. So long as you aren’t doing anything illegal, you can mine Bitcoin in provinces all across the country.
So, if you want to mine using a CPU or GPU, you can do so. If you want to use an ASIC for mining, that’s fair game as well. Cloud mining is also legal throughout Canada.
The only place you’ll have trouble mining Bitcoin in Canada is in Quebec, but that’s primarily because of Hydro-Quebec, an electric company in the province.
This company has created restrictions on its energy consumption which prevents miners from using much electricity.
As a result, once 300 megawatts of electricity is consumed, Hydro-Quebec steps in and restricts access to energy. Unfortunately, this means many in Quebec who might be interested in mining Bitcoin don’t have the ability to do so.
Otherwise, you’re good to go when mining Bitcoin in Canada. Compare this to other countries, like China or the United States, which have significant regulations and restrictions in place when it comes to mining Bitcoin or cryptocurrencies in general.
Lastly, bear in mind that Bitcoin is not viewed as legal tender by the Canadian government.
That means any Bitcoin you receive as a reward isn’t insured by the federal government. Additionally, no retailer or merchant is required to accept Bitcoin in exchange for goods or services.
Is it Safe to Mine Bitcoin in Canada?
It is perfectly safe to mine Bitcoin in Canada. As far as the Canadian government is concerned, you’re free to mine as much as you like, so long as you pay the proper amount of taxes on any profits you earn. Of course, you might want to be conscientious of how much energy you’re using.
At the very least, reach out to your local electrical company to find out their policy on Bitcoin mining. If you are able to earn more from Bitcoin than you spend on electricity, then you’re coming out ahead. That makes mining Bitcoin a safe activity in which to participate.
When mining Bitcoin, it’s important to understand Proof-of-Work. Think of mining Bitcoin much the same way as mining for silver or gold. Physical miners want to uncover silver, diamonds, or gold.
Along those same lines, Bitcoin miners want to release new Bitcoin. If you want to earn Bitcoin through mining, you’re going to need a machine that can solve complicated algorithms that take on the form of a crypto hash.
If you’re unfamiliar with the term, a hash is a chunk of data held within a shortened digital signature. The has is generated when data is moved to the Bitcoin network.
Miners work against other miners to discover the hash. The first miner to solve the algorithm and add the block to the chain gets the Bitcoin reward from that block.
Every block – except the first block – uses a hash to point back to the previous block.
This creates a chain of blocks full of validated network transactions. This is how users on the Bitcoin network can quickly and easily confirm transactions on the blockchain.
There are plenty of ways to mine Bitcoin in Canada. While the barriers to entry vary for each method, Canada itself won’t keep you from mining Bitcoin. Of course, the method you choose will greatly impact how long it takes to recoup your investment.
Mining Bitcoin in Canada is legal and safe, so if you’re within the country’s borders, you won’t face any pushback from the government.
Remember that Bitcoin isn’t legal tender in Canada, so no retailer is required to accept it. Plus, you’ll need to pay taxes on any profits you make. That said, it’s easy to get started. Find a rig that works for you, and have fun!